CSRHub Blog Research on ESG metrics and comments on sustainability best practice

Donald Trump’s election has sent the global climate community into a tailspin.

It seems every climate change action supporter is making lists of the awful things he’s planning to do, so I’ll turn to the very succinct one I received in a Sunday morning email from Michael Brune, Executive Director of the Sierra Club:

End of Paris Climate deal. End of the EPA. End of the Clean Power Plan. More drilling. More coal. More pipelines. More lives destroyed. More wildlife bulldozed.

But we can’t forget what Neal Leary at Dickinson College’s Center for Sustainability Education reminds us in the Huffington Post the scariest fact of all: “Mr. Trump has asserted that climate change is a hoax.”

Leary refuses to give up: “I put my hope and efforts in action at state, local and institutional levels to keep and build momentum toward a clean, low-carbon U.S. energy system.”

Top on my list of Professor Leary’s institutional efforts would be American businesses, especially those that have turned away from fossil fuels and towards renewable energy for the most American of reasons — profit.

How can renewable energy mitigate risk? The direct answer is that by installing their own solar power — either by building solar plants, as Google and other firms are doing, or via rooftop solar to supplement the energy they draw from the grid — these companies ensure access to power without the risk of price fluctuations endemic to fossil fuels.

But there are other reasons why renewable energy lowers risk. For one, investors are becoming increasingly concerned with business’ environmental practices as Corporate Social Responsibility (CSR) becomes common practice. Charles Schwab features Socially Responsible Investing (SRI) on its Mutual Funds web page, commenting that it is “emerging as a significant trend in the financial markets” and noting that SRI increased 28% between 2012 and 2014, when total SRI assets topped $4.3 trillion. More investors reduces a company’s cost of borrowing in tough times, when raising money can otherwise be expensive.

But the even greater risk of not participating in environmentally sound policies is the potential damage to the brand. CSRHub, the sponsor of this blog and the world’s largest CSR database, analyzed its CSR ratings against data on brand strength and finds significant correlation.

In other words, what a company does for its community, including environmentally, affects the value of its brand. And that means customers are more loyal. And that translates into how much a company can charge for its products and its profitability.

Not everyone is a fan of CSR. But despite some bad actors using CSR to “green-wash” their reputations, the concept is embedded in American business and may provide a bulwark against climate deniers now coming to power. And who knows. If Trump does what he’s said he wants to do, eliminating the Affordable Care Act and drastically reducing social services, he might find himself in need of a boost to his reputation. And what could be more effective than saving the planet.

Carol Pierson Holding is President and Founder, Holding Associates. Carol serves as Guest Blogger for CSRHub. Her firm has focused on the intersection of brand and social responsibility, working with Cisco Systems, Wilmington Trust, Bankrate.com, the US EPA, Yale University’s School of Environmental Sciences, and various non-profits. Before founding Holding Associates, Carol worked in executive management positions at Siegel & Gale, McCann Erickson, and Citibank. She is a Board Member of AMREF (African Medical and Research Foundation). Carol received her AB from Smith College and her MBA from Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and rankings information on 16,495+ companies from 135 industries in 133 countries. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

Volkswagen’s recent emissions scandal has been the subject of countless media reports, with news organizations such as Huffington Postposting nearly hourly updates. Even stories focused on financial or reputational damage touch on a deep sense of betrayal. This wound was captured best in a New York Times op-ed piece called “Me and My Jetta: How VW Broke My Heart” in which Richard Conniff, a science and nature writer, tells his story of buying a new Jetta in 2009 because it was “clean diesel.” In fact, it had just been deemed “Green Car of the Year” by the Sierra Club Executive Director. In those days, diesel engines were the environmental winners among gas-fueled cars, promising to be both cheaper to run and good for the planet. Those are the same attributes on which VW has positioned its brand since its first U.S. ad campaign in the 1960s advised buyers to “Think Small” and buy the Beetle.

After all, the German word volkswagen literally means “people’s car.”

VW made its Beetle wildly successful as “the car of the hippie movement." And ever since, VWs have been to a more or less extent the cars of the counter culture.

This brand persona is in direct opposition to the company’s culture. As James Stewart writes, quoting a former VW executive:

“…a scandal, especially one involving emissions, was all but inevitable at Volkswagen… (due to) the company’s isolation (in its company town of Wolfsburg), its clannish board and a deep-rooted hostility to environmental regulations among its engineers….

“People (at VW) have a completely uncritical view of cars and their impact on the environment because they all make a living from the industry. …Volkswagen is seen as having a national mission to provide employment to the German people. That’s behind the push to be No. 1 in the world. They’ll look the other way about anything."

But none of those companies positioned itself as green, whereas VW used its environmental positioning in the U.S. for 65 years.

That positioning went beyond VW cars. The company made a concerted effort to make diesel fuel appear to be the environmental standard, even putting a miles per gallon indicator in the center of the dashboard.

It’s not just the scandal itself, but the cynicism of VW’s environmental claims that makes this such a staggering betrayal.

Those in sustainability bemoan the damage the VW scandal might inflict on the entire Corporate Social Responsibility (CSR) movement. The voice of that movement, Triple Pundit, ran a piece by Leon Kaye using the VW example to expose what has gone wrong with CSR, revealing “a global business culture that awards and rewards itself on ‘sustainability’ and ‘responsibility’ but frequently does not match accolades with accomplishments.”

Of course, business rhetoric should support real action, and most does. Business has in many instances embraced sustainability, especially when its environmental efforts lower costs as well. But I believe the problem with CSR is much more insidious: a company can achieve the highest CSR score but still make lethal products that kill people and planet. And let’s face it, cars that run on fossil fuels are just as big a problem as fossil fuels themselves.

Governments and consumers are calculating what are bound to be enormous financial penalties. Some believe that the German government will have to step in to save the company as the U.S. saved Detroit. This is a huge opportunity: with the German Chancellor and Economy Minister calling for Electric Vehicles incentives, why couldn’t the same government predicate a VW bail out on using its vaunted engineering prowess to create an electric car for the people? And use the fines to build out the charging station network and speed conversion from fossil fuels, the source of over 50% of its energy, to renewables?

Many of the articles on the scandal mention VW’s roots in Nazi Germany, a link that until now has been overshadowed by its environmental positioning. Why not bring back that loyalty by leading electric car technology as it once led small cars?

If consumers can be persuaded to Think Small, they can surely be persuaded to Think Green, especially by a company steeped in earth-friendly heritage. Environmentalists are notorious forgivers – and who doesn’t love the idea of an electric “people’s car” — especially after some serious mea culpas.

Carol Pierson Holding is President and Founder, Holding Associates. Carol serves as Guest Blogger for CSRHub. Her firm has focused on the intersection of brand and social responsibility, working with Cisco Systems, Wilmington Trust, Bankrate.com, the US EPA, Yale University’s School of Environmental Sciences, and various non-profits. Before founding Holding Associates, Carol worked in executive management positions at Siegel & Gale, McCann Erickson, and Citibank. She is a Board Member of AMREF (African Medical and Research Foundation). Carol received her AB from Smith College and her MBA from Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 15,000+ companies from 135 industries in 132 countries. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

A retired nurse friend related a story last week told to her by the young waitress at the Vol du Vent restaurant in the picturesque beach town of White Rock, British Columbia. As the waitress was serving lunch, a train filled with coal passed between the restaurant and Semiamoo Bay. After her view cleared and the noise had abated, my friend mentioned her fear of the coal ports proposed for five Pacific Northwest sites and the harm to health the coal dust would inflict.

The waitress claimed empty cars were the worst offenders. Her house is covered with dust that is not tamped by the surfactant sprayed on full coal loads. Black soot enters through her windows to rest on blinds and furniture. Colors in her early spring flowerbed are greyed. She was too young to think about health impacts, but her images were heartbreaking.

The next day, still recovering from my friend’s apocalyptic nightmare and its implications for proposed coal ports near me in Washington State, I stopped everything to read the Sightline Weekly Newsletter headlined “Coal Exports: Two Weeks of Good News.”

I wasn’t disappointed.

Sightline has been investigating Pacific Northwest coal ports permitting since the beginning and has an exhaustive blog series on the subject. The series often chronicles the bad news, including the dispiriting number of strategy and PR firms under contract with coal companies and law firms with deep ties to the industry.

So what’s the good news? Small actions really do add up, and it looks like the coal ports issue may have reached a tipping point. As Sightline’s Program Director Clark Williams-Derry says, “When you string together all the new developments, there are more and more signs that coal export proposals are on the ropes.”

Williams-Derry’s article lists seven positive developments, the most impressive of which is that the coal port project at Coos Bay, Oregon was shut down. The last remaining partner, Metro Ports, withdrew after both Mitsui and Korea Electric Power Corp dropped out last month. “The port is moving on to the next phase,” said port CEO David Koch.

What killed Coos Bay? The port’s press release blames it on an group led by the Sierra Club, whose arguments were both environmental and financial: Asian demand for coal is falling as pollution and the effects of global warming grow.

These realities came first to the Asian partners, who suffer directly from coal pollution. Beijing’s heavy coal smog drifts to Tokyo, headquarters for Mitsui; the two cities have entered an agreement to pursue technical solutions. Seoul, headquarters for Korea Electric Power, has levels of sulphur and nitrogen oxide from coal burning in China that were four times over the acceptable level and is equally eager to forestall more coal burning.

Korea Electric’s decision was undoubtedly due to financial reasons as well. As the Huffington Post reports, a spokesperson for Korea Electric blamed the timing of the investment. But like the waitress in White Rock, company decision-makers from both Asian investors in Coos Bay had personal experience with coal’s mal effects. And they are certainly interested in their company’s financial health. But when coal smog affects their families, profit becomes secondary.

And there are plenty of personal experiences standing in the way of coal ports:

Local residents currently in the path of coal trains bound for the Gateway Pacific Terminal just north of Seattle sent most of the 124,000 comments to the lead agencies for the Environmental Impact Statement (EIS) Scoping Report, which highlighted public opposition as a key issue.

Puget Sound Native tribes sued to stop coal dust from imperiling their salmon habitat and won $1 billion from the state in culvert repairs, a ruling that makes habitat protection another hurdle for coal trains.

The Sierra Club issued an intent to sue rail and coal companies for coal dust pollution under the Clean Water Act, a direct attack on the coal ports.

You might think that the only way these massive coal port projects can be stopped is by an equally massive force. And yet, that turns out not to be the case. It’s an executive in Korea, Native-Americans in Washington, lots of people protesting online, and a waitress in White Rock stirring up people who live 100 miles away. It takes the global village. Let’s hope the efforts continue.

Carol Pierson Holding writes on environmental issues and social responsibility for policy and news publications, including the Carnegie Council's Policy Innovations, Harvard Business Review, San Francisco Chronicle, India Time, The Huffington Post and many other web sites. Her articles on corporate social responsibility can be found on CSRHub.com, a website that provides sustainability ratings data on 7,000 companies worldwide. Carol holds degrees from Smith College and Harvard University.

CSRHub provides access to corporate social responsibility and sustainability ratings and information on 7,000+ companies from 135 industries in 91 countries. By aggregating and normalizing the information from 200 data sources, CSRHub has created a broad, consistent rating system and a searchable database that links millions of rating elements back to their source. Managers, researchers and activists use CSRHub to benchmark company performance, learn how stakeholders evaluate company CSR practices and seek ways to change the world.

Unfortunately, there's no playbook for the successful corporate merger of sustainability, growth and employee engagement. But there are living examples to help C-level executives navigate corporate sustainability.

Speaking at the recent GreenBiz Forum in San Francisco, Don Knauss, CEO of Clorox, explained how Clorox's 2007 introduction of its Green Works line successfully merged the three. Clorox wanted to grow into the green area and its employees became really engaged in the process. The line quickly grew to $100 million in sales in one year – although sales dropped in the recession to follow. The repositioning of Brita and acquisition of Burt’s Bees also contributed to growth, and enhanced Clorox’s reputation for producing sustainable products.

Clorox’s ethnographic research found that consumers want to get chemicals away from their kids and out of the home (and then secondarily the planet). In addition to the movement toward sustainable products, Clorox committed to four goals: reduce production of solid waste, and reduce use of carbon, energy and water. These goals are now part of the Clorox executive scorecard and how executives are compensated, and part of its Board obligations.

Knauss seemed pleased that this push on water, energy and carbon reductions may save Clorox $25 million per year. He stressed that consumer product executives must get out of their comfort zone and talk and listen to people they wouldn’t normally. For example, Don asked Carl Pope at the Sierra Club to put the Green Works products through a rigorous testing program. Clorox also worked with Greenpeace to move their bleach plants away from chlorine—a transition they began 18 months ago. Because they are making these initiatives part of their incentive systems, Knauss says “Sustainability is becoming part of the DNA.”

I also noted last week that Clorox has become the first in its industry to offer expanded disclosure on the ingredients found in its cleaning products. This disclosure includes information on preservatives, dyes and fragrances. As part of their Ingredients Inside program, the company publishes this information for customers on its corporate social responsibility website.

I was anxious to compare the Clorox rating on CSRHUB with the one on GoodGuide. CSRHUB rates broad performance at the corporate level, while GoodGuide provides a corporate number and also detailed ratings at the product level. The CSRHUB rating is just average on Clorox (50), with a fairly low rating of 41 (on a scale of 0-100) for transparency in reporting. This may be because Clorox only published their first CSR report several months ago. However, Clorox does get a 65 for its Board subcategory score, which may reflect the fact that they have ten independent board members, of whom three are women and two are Latino. Also, of the CEO’s seven direct reports, three are women.

GoodGuide rates 349 of Clorox products. Within these, the top ratings go to Burt’s Bees and Green Works products and the lowest ratings go to Liquid Plumr Foaming Pipe Snake Clog Remover and several disinfecting sprays scoring around 5 (on a 10 point scale).

Many in the sustainability area may be surprised to see these ratings and to hear Clorox’s CEO talking so passionately about making his company more sustainable. Congratulations to Don Knauss for his leadership, and to Clorox for publishing its first CSR report, going public with its ingredients list, and planning to improve another chunk of its product line to improve the health and environmental benefits. This is truly the virtuous circle at work.

Cynthia Figge, Cofounder and COO of CSRHUB is a forerunner and thought leader in the corporate sustainability movement. In 1996 she co-founded EKOS International, one of the first consultancies integrating sustainability and corporate strategy. Cynthia has worked with major organizations including BNSF, Boeing, Coca-Cola, Dow Jones, and REI to help craft sustainability strategy integrated with business. She was an Officer of LIN Broadcasting/McCaw Cellular leading new services development, and started a new “Greenfield” mill with Weyerhaeuser. She serves as Advisor to media and technology companies, and served as President of the Board of Sustainable Seattle. Cynthia has an MBA from Harvard Business School. Cynthia is based in the Seattle area.